Sugar millers are concentrating largely on Ethanol to improve their financial health and remain afloat in business after a narrow movement in Sugar prices.
Oil marketing companies (OMCs) have issued a tender for procurement of 485 million litres of Ethanol from ‘B’ heavy molasses and 18.4 million litres from Sugarcane juice for the current Sugar season beginning October 2018.
This additional tendered quantity is likely to result in diversion of 0.5 million tonnes of Sugar into Ethanol in addition to the existing quantity directly procured from molasses generated automatically from cane crushing.
Apart from the additional quantity of Ethanol production and sale, the price increase by the government has helped mills increase their top line and bottom line in December 2018 quarter and is also likely to continue supporting them in future as well.
The benefit of upward revision in Ethanol prices by the government, with effect from December 1, 2018, to Rs 43.46 a litre should be seen from January–March 2019 and fully during the financial year 2019-20. Profitability from this segment would increase in the financial year 2020 due to the benefit of higher prices and also higher volumes.